Regarding Valuation of Closing Stock of Raw Materials

Q: I want to know whether storage costs (rent for storage of materials until it is used in production) will be considered for valuation of closing stock of raw materials or not.

A: Very good question Srinivas.

Rent for materials would be considered a manufacturing overhead cost. It would not form part of the value of the closing stock of raw materials. It would, however, form part of the finished goods that are produced at the manufacturing plant.